The oil and gas industry has blasted the surprise move by the federal government for a cash-bidding system for offshore petroleum exploration licences, warning it will reduce funds available for drilling.

Federal Resources and Energy Minister
Martin Ferguson
said on Wednesday that the system, which would be a new government revenue stream, would apply to “mature" areas known to hold oil and gas.

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He wouldn’t estimate how much revenue it would raise but said it might set a reserve price on some acreage. “We might have a floor price below which if we don’t get what we think is appropriate from the opportunity you just don’t award an outcome," he said.

He also announced an extra $114 million funding for Geoscience Australia, including $26 million a year for gathering data to improve knowledge of Australia’s resource base.